## Facts

- In 1951–1952, ranch owners George and John Hamman executed oil and gas leases on their Upton County, Texas land to Shell Oil Co. and Superior Oil Co. (the “bottom leases”).
- The bottom leases had no fixed termination date and could continue as long as production continued; they conveyed a fee simple determinable to the lessees and left the lessors with a possibility of reverter.
- The Hammans later executed two “top leases” on the same land to John Hamman’s son.
- Each top lease stated it would run for a “primary term” that included “ten (10) years after and subsequent to the forfeiture, or to the expiration” of the bottom leases.
- Each top lease also stated that, during the existence of the bottom leases, the lessors’ “rights, interests, estate, privileges and royalties” under the bottom leases would remain vested in the lessors, free of any claims by the top lessee.
- After the bottom leases later terminated, the top leases were assigned and subleased, ultimately involving Bright & Co. as a sublessee; the parties also executed later ratification agreements and related subleases concerning the top-lease interests.
- The Hammans sued Bright & Co. for underpaid royalties and other relief under the top leases.
- Bright & Co. asserted the top leases were void from inception because they violated the Texas constitutional Rule Against Perpetuities.

## Issues

1. Whether the top leases created future interests that could vest outside the perpetuities period, making them void under the Texas Constitution’s Rule Against Perpetuities.
2. If the top leases were void at inception, whether later ratification agreements or related instruments could validate them.

## Decision

- The court affirmed summary judgment for Bright & Co.
- It held the top leases created springing executory interests that might not vest within the perpetuities period because vesting depended on termination of bottom leases of indefinite duration.
- It held the top leases were void ab initio under the Texas constitutional Rule Against Perpetuities.
- It held later ratifications and related instruments could not validate an agreement that was unconstitutional and void from inception.

## Legal Principles

- An interest is invalid under the Rule Against Perpetuities unless it must vest, if at all, within twenty-one years after the death of a relevant life in being at the time of creation.
- Oil and gas leases generally convey a fee simple determinable to the lessee and leave the lessor a possibility of reverter; a possibility of reverter is a presently vested interest and is not subject to the Rule Against Perpetuities.
- An executory interest that springs into existence only upon a condition precedent is a future interest subject to the Rule; the interest is void if it could vest outside the perpetuities period under any possible contingency, measured at the time the instrument is executed.
- A contract or conveyance that violates a constitutional provision is illegal and absolutely void, and is not subject to ratification.

## Conclusion

Because the top leases expressly left the lessors fully vested during the bottom leases and purported to grant rights only upon the bottom leases’ indefinite termination (plus an additional ten-year period), the court treated the grants as springing executory interests that could vest too remotely, rendering the top leases void from inception and incapable of being cured by later ratification.


Hamman v. Bright & Co., 924 S.W.2d 168 (Tex. App.—Amarillo 1996)